Dreamer, schemer couldn't agree
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Ford began making his millions at the same time that Durant, an ambitious stock speculator, discovered the wiles of automaking, buying a Flint, Mich., business called Buick Manufacturing in 1904.
Ford may have been the dreamer, but Durant was the schemer.
Most of a century later, their respective results would tower over the industry - Ford Motor Co. and Durant's General Motors. And it would be the relentless rivalry between the two companies that would spawn the proliferation of competing cars, trucks, components, technologies and consumer services that would help make the world a little richer. But that productive rivalry almost didn't happen.
Durant knew something in 1904 that still reverberates today: Success in the market requires critical mass. He knew that Buick alone wouldn't make him rich. Durant wanted to consolidate the country's major automakers into one giant corporation that he would control. And that meant buying out Henry Ford.
The restless Ford considered selling his company several times in the early years of the 20th century. In 1908, Durant eagerly sought to oblige him - either with $3 million in cash or, later, with less cash but more in stock. Durant would acquire Ford through a holding company that would trade Ford stock for stock in the new conglomerate. Durant proposed the name "International Motors." The pitch brought Ford to the table in 1909.
It was a moment of dejection for the Dearborn pioneer. Ford had just been stunned by the outcome of a six-year lawsuit against his company. A technology licensing firm called Electric Vehicle Co. claimed to hold the U.S. patent, the so-called Selden patent, for self-propelled gasoline engines.
Ford had refused to pay patent royalties. But when a court ruling upheld Electric Vehicle's claim for royalties, Ford began to entertain Durant's buyout offer.
But Ford was too impatient for stock swaps. Writing nearly 80 years later in their book The Fords: An American Epic, authors Peter Collier and David Horowitz captured the feisty Ford lying with a backache on the bathroom floor in his New York hotel suite, while his chief strategist, James Couzens, negotiated the buyout downstairs with Durant.
Couzens informed the prostrate Ford that Durant would pay $8 million to buy Ford Motor Co., provided the founder agreed to a no-compete clause.
"Tell him he can have it if the money's all cash," Collier and Horowitz quote Ford shouting to Couzens. "Tell him also I'll throw in my lumbago."
Too bad for General Motors: Durant let that offer linger. Negotiations continued, but in the end, Durant failed to meet the demand for cash. Within two years of the buyout meeting, a U.S. Court of Appeals had overturned the Selden patent ruling in favor of Ford. Henry Ford was free to build and sell as many gasoline-engine vehicles as he pleased. GM would spend the century fighting Ford tooth and nail over every tenth of a point of market share.
You can reach Lindsay Chappell at lchappell@crain.com.
